HB 177: "An Act relating to employee and employer contributions to the teachers' retirement system and the public employees' retirement system; and providing for an effective date."
00 HOUSE BILL NO. 177 01 "An Act relating to employee and employer contributions to the teachers' retirement 02 system and the public employees' retirement system; and providing for an effective 03 date." 04 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 05 * Section 1. AS 14.25.050(a) is amended to read: 06 (a) Except as provided in (c) of this section, beginning July 1, 2005 07 [JANUARY 1, 1991], each member shall contribute to the system a percentage [AN 08 AMOUNT EQUAL TO 8.65 PERCENT] of the member's base salary accrued from 09 July 1 to the following June 30, as determined under AS 14.25.052. The employer 10 shall deduct the contribution from the member's salary at the end of each payroll 11 period, and the contribution shall be credited by the system to the member 12 contribution account. The contributions shall be deducted from employee 13 compensation before the computation of applicable federal taxes and shall be treated 14 as employer contributions under 26 U.S.C. 414(h)(2). A member may not have the
01 option of making the payroll deduction directly in cash instead of having the 02 contribution picked up by the employer. 03 * Sec. 2. AS 14.25 is amended by adding new sections to read: 04 Sec. 14.25.052. Calculation of member contribution rate. Each active 05 member shall contribute a percentage of the member's base salary to be determined 06 annually in advance by the administrator. The employee contribution rate is the 07 percentage of employee compensation needed to fund the system under AS 14.25.053. 08 The maximum increase in the contribution rate for a member from one year to the next 09 may not be more than five percentage points, as actuarially calculated. 10 Sec. 14.25.053. Coordination of employer and member contribution rates. 11 (a) The administrator shall determine the annual amount that is required in addition to 12 the amounts in the retirement fund to provide the benefits of this chapter to all 13 members. The annual amount shall be funded to the extent allowed by AS 14.25.052 14 and 14.25.070 by equal contributions from employees and employers. 15 (b) If the annual amount required in addition to the amounts in the retirement 16 fund to provide the benefits of this chapter to all members results in a lower 17 contribution rate for employees and employers than that established for the prior year, 18 then contribution rates shall both be equally reduced by the same percentage points if 19 the employee and employer contribution rates are equal. 20 (c) In the event that the employee contribution rate is not the same as the 21 employer contribution rate, notwithstanding (b) of this section, the administrator shall 22 raise the employee or the employer contribution rate, as appropriate, on an annual 23 basis, limited by the annual maximum increase in percentage points, so as to increase 24 the lower contribution rate until both contribution rates are the same. 25 * Sec. 3. AS 14.25.070 is amended to read: 26 Sec. 14.25.070. Contributions by employer. An employer shall contribute to 27 the system an amount equal to the percentage, as certified by the administrator, of the 28 sum total of the base salaries of all members that is required in addition to member 29 contributions to provide the benefits of this chapter times the sum total of the base 30 salaries paid to members, including any adjustments to contributions required by 31 AS 14.25.173(a), by the employer. The maximum increase in the contribution rate
01 for employers from one year to the next may not be more than five percentage 02 points, as actuarially calculated. 03 * Sec. 4. AS 39.35.160(a) is amended to read: 04 (a) Beginning July 1, 2005 [JANUARY 1, 1987], each peace officer or fire 05 fighter shall contribute to the system a percentage [AN AMOUNT EQUAL TO 06 SEVEN AND ONE-HALF PERCENT] of the peace officer's or fire fighter's 07 compensation as determined under AS 39.35.162. Except as provided in (d) of this 08 section, beginning July 1, 2005 [JANUARY 1, 1987], each other employee shall 09 contribute to the system a percentage [AN AMOUNT EQUAL TO SIX AND 10 THREE-QUARTERS PERCENT] of the employee's compensation as determined 11 under AS 39.35.162. The contributions shall be deducted by the employer at the end 12 of each payroll period. The contributions shall be deducted from employee 13 compensation before computation of applicable federal taxes, and the contributions 14 shall be treated as employer contributions under 26 U.S.C. 414(h)(2). A member may 15 not have the option of making the payroll deduction directly instead of having the 16 contribution picked up by the employer. 17 * Sec. 5. AS 39.35 is amended by adding new sections to read: 18 Sec. 39.35.162. Calculation of member contribution rate. Each peace 19 officer or fire fighter shall contribute a percentage of the peace officer's or fire fighter's 20 compensation to be determined annually in advance by the administrator. Each other 21 employee shall contribute a percentage of the employee's compensation to be 22 determined annually in advance by the administrator. The employee contribution rate 23 is the percentage of employee compensation needed to fund the system under 24 AS 39.35.164. The employee contribution rate for peace officers or fire fighters and 25 the employee contribution rate for other employees shall be separately calculated 26 based on the actuarially calculated costs for each group of employees. The maximum 27 increase in the contribution rate for a peace officer or fire fighter or other employee 28 from one year to the next may not be more than five percentage points, as actuarially 29 calculated. 30 Sec. 39.35.164. Coordination of employer and member contribution rates. 31 (a) The administrator shall determine the annual amount that is required in addition to
01 the amounts in the fund to provide the benefits of this chapter to all members. The 02 annual amount shall be funded to the extent allowed by AS 39.35.162 and 39.35.250 03 by equal contributions from employees and employers. 04 (b) If the annual amount required in addition to the amounts in the fund to 05 provide the benefits of this chapter to all members results in a lower contribution rate 06 for employees and employers than that established for the prior year, then contribution 07 rates shall both be reduced by the same percentage points if the employee and 08 employer contribution rates are equal. 09 (c) In the event that the employee contribution rate is not the same as the 10 employer contribution rate, notwithstanding (b) of this section, the administrator shall 11 raise the employee or the employer contribution rate, as appropriate, on an annual 12 basis, limited by the annual maximum increase in percentage points, so as to increase 13 the lower contribution rate until both contribution rates are the same. 14 * Sec. 6. AS 39.35.250 is amended by adding a new subsection to read: 15 (d) The maximum increase in the contribution rate for employers from one 16 year to the next may not be more than five percentage points, as actuarially calculated. 17 * Sec. 7. This Act takes effect July 1, 2005.